Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Principal Issues: Whether an individual who jointly owned a home with her ex-husband can participate in the HBP if she is divorced at the time of withdrawal.
Position: No as she is not a first-time homebuyer
Reasons: Application of the Act
XXXXXXXXXX 2004-006420
M. P. Baldwin, CA
March 8, 2004
Dear XXXXXXXXXX:
Re: The Home Buyers' Plan
This is in reply to your email of February 20, 2004 and our telephone conversation (Baldwin/XXXXXXXXXX) of February 26, 2004 in which you request our comments on whether a particular individual would be considered a first-time homebuyer under the Home Buyers' Plan ("HBP") and be able to participate in the HBP.
It appears that the opinion you seek relates to a specific fact situation that is related to a proposed transaction to be undertaken by a specific taxpayer and, therefore, we bring your attention to Information Circular 70-6R5 dated May 17, 2002, issued by the Canada Revenue Agency (the "Agency"). Copies of Interpretation Bulletins, Information Circulars and Guides are available on the Agency's Internet site. Confirmation of tax consequences with respect to a proposed transaction involving a specific taxpayer will only be provided in response to a request for an advance income tax ruling. However, we can provide you with the following general comments.
The Agency's general views regarding the HBP are in the guide tilted "Home Buyers' Plan (HBP)" (RC4135). In order to participate in the HBP, an individual has to satisfy several conditions, which are described in the Guide.
One of the conditions required for participation in the HBP is that the individual qualify as a first-time homebuyer. An individual would not be considered a first-time home buyer if, at any time during the period beginning January 1 of the fourth year before the year of the withdrawal and ending 31 days before the HBP withdrawal, the individual had an owner-occupied home or the individual's spouse or common-law partner owned a home that the individual occupied as their principal place of residence. An individual will be considered to have an owner-occupied home where the individual owns (jointly or otherwise) a housing unit and the housing unit is inhabited by the individual as the individual's principal place of residence at that time. Also, the Income Tax Act does not contain any provision that limits the above-mentioned period when an owner-occupied home was sold as a consequence of a marriage breakdown. Consequently, it is our view that a divorced individual will not be a first-time homebuyer where at the time the withdrawal is made he/she has jointly owned a housing unit with his his/her ex-spouse in the required period.
We trust that the above comments will be of assistance to you.
Yours truly,
Roberta Albert, CA
for Director
Financial Industries Division
Income Tax Rulings Directorate
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